Spain’s Lost Generation: What Do You Do When Half Your Country’s Youth is Unemployed?

May 30, 2012

“They say we’re a lost generation. But it’s more like we’re a paralyzed generation,” Mario tells me over a beer on a sweltering Monday afternoon in Toledo. He is a twenty-five year-old Spaniard, and already his future prospects look unsalvageable. He holds a degree in visual communications, but irregular work and a negligible income have forced him to move back in with his parents. At the moment, he scrapes by working as a temp at regional post-offices, hoping each day that some employee might call in sick.

“I’m basically tied to my cell phone,” he starts to say. And for a fleeting second, as the words hang there in the sun-drenched Plaza Horno de Magdalena, he might be in New York, London or Berlin, lamenting some high-intensity job with around-the-clock demands. But when he motions to his phone, it’s not a blackberry. “I need to take anything I can get,” he continues, “and so when they call me the morning of or the night before, I go; wherever it is.”

Mario’s desperation is a familiar feeling: Unemployment in Spain is 25 percent, and youth unemployment hovers at double that. Of all the jobs lost to the country’s protracted recession, about half have come from the construction sector alone. Spain’s Castille-La Mancha—Toledo is its capital—is especially hard hit. The country’s flourishing construction industry helped support this desert-streaked region during the boom years. Union workers tell me that the chief business then was the manufacture of doors. It was a nondescript fact of life that now creaks with a grimly literary suggestion: Once a portal to other places and ascendant prospects, Castille-La Mancha is a hull of its former self.

Like so many others throughout Spain, Mario’s voice has that brittle, dry quality of an old confidence that’s begun to splinter. He tells me that he’s “not particularly hopeful” about what’s in store. To his left sits Raquel—another Toledo native, the same age as Mario, and a self-professed optimist. She cuts in: “I have two degrees, but I may as well not have studied anything at all.” When I ask her about her next move, she says that she’s thinking of leaving the country. She mentions a secondary school in Italy where she could teach humanities. Flushing slightly, she quickly adds that job prospects there are only marginally better than in Spain.

Raquel had hit on a familiar pattern among young Spaniards as they agonize over what to do while the economy worsens. An idea flickers with possibility then promptly darkens under a swarm of caveats. To speak with young Spaniards is to listen to the expectations of an entire generation buckling under the weight of a hopelessly constrained economic reality.

THE HIGHLY ARTICULATE, university-educated indignados who have taken to the streets in the big-metropolitan hubs (or who confidently sound off before foreign journalists, for that matter) are only one part of the story of Spain’s “lost generation.” The other has to do with those who are not as likely to be heard—mostly because they’re not convinced that talking will get them anywhere.

In the words of public policy consultant Jorge Galindo, this other subclass of unemployed remains more or less “invisible.” These people left school in their late teens to claim inflated salaries working construction. They are visibly less self-possessed than their educated counterparts, who are buoyed somewhat by the aplomb conferred by a college education and membership in the middle class. The middle-class, university-educated parados (jobless) tend to do two things, according to Galindo. Either they go back to school to get a masters degree and beef up their CV’s while waiting out the crisis. Or they leave for places like Germany or England. Those who do that, Galindo says, are “only those who can afford it.”

It is even worse for wage laborers who dropped out of school; they are truly stuck. In regions like Castille-La Mancha, drop out rates were especially high, as construction salaries beckoned. Out of work, these people are hanging by the thread of dwindling unemployment checks.

Jesus, a 33 year-old parado, is one such person. We met in Toledo. At seventeen, he embarked on a series of jobs that ranged from agricultural labor to metallurgy and two stints in construction. Only once did he have a fully serviceable contract—known here as a contrato indefinido—that furnished benefits and afforded some measure of job-security. The company folded, though, and soon he was back to temporary contracts.

“There are two ways you get paid under those construction contracts,” he explained, “in ‘A’ and in ‘B.’” “A” means being paid on the books; “B” off-them, or en negro. Employers routinely paid construction workers large amounts of cash under the table and only nominal “official” salaries. Not only could they avoid paying additional taxes this way; also, it enabled them to pay out less in benefits to the workers they’d eventually let go, since those benefits are tied, in part, to the size of workers’ salaries. As Jesus told me, “I ended up getting significantly less benefits than were due me.”

The peculiarities of the Spanish labor market are at the very crux of the youth unemployment problem. In Spain, unemployment in general, and youth joblessness in particular, are a chronic condition that tends to flare up during economic downturns. It struck during the early 1980s and again in the mid 1990s. (Though because of constraints imposed by the Euro and a dearth of economic growth policies, this latest crisis is undoubtedly the worst.) Much of the volatility in the labor market is the result of friction between the well-protected contracts negotiated in by the unions in the past, and the system of precarious tempomrary contracts that has proliferated in their wake. It is impossible to understand the generational rift at the heart of contemporary Spain without examining the traditional strength of Spain’s unions.

In the late 1970s and early 80s, in the heady days of Spain’s transition to democracy, the country’s parties made a concerted effort to show their affinity for the working classes; in practice, this meant accommodating unwieldy union demands. Job protection was paramount, explained Professor Sara Watson, a political scientist specializing in Spanish and Portuguese labor at Ohio State University. When a recession hit in the 1980s, one of the few ways the government could combat unemployment without cutting into existing labor prerogatives was to create temporary contracts. These were designed to make it easier for businesses to hire young people (as well as immigrants). But since it paid out fewer benefits, it also made it cheaper for businesses to shed these workers when the going got tough. Little was done to reduce the long-term fallout because a succession of politicians on the left and right shrank from instituting unpopular, if much needed, reforms.

As a result, the labor market has gradually calcified into two tiers. Since the recipients of temporary contracts are generally the country’s youth, young Spaniards have routinely occupied the market’s lower rung. There is thus a steep drop-off in how Spain’s older and younger generations have been trained to think of their economic prospects. According to economist Carlos Sebastián, Professor of the Fundamentals of Economic Analysis at Madrid’s Complutense University, this has introduced a raft of perverse incentives for employees and employers alike. In talking to Spaniards in their twenties and thirties, it is typical to meet people, regardless of their backgrounds, who describe being hired for a year or two, then fired, and rehired several months later. It’s also rare to find anyone in her twenties or thirties who has had, or knows someone who has worked under, anything other than temporary contracts, or some variant of them.

JESUS SAYS HE regrets dropping out of school. But in the new age of austerity, options to make up for his past decisions are severely limited: Public educational programs for adults over twenty-five years old are being slashed as part of massive spending cuts in education. The few courses that remain are oversubscribed, and there are long waiting lists, Jesus says.

“Still,” he adds, “I’m lucky.” He doesn’t have a family to support right now, like many of his friends. Among his former work companions, those with children of their own have had to move back in with their parents. Increasingly, Spaniards well into their thirties, and in some cases early forties, are returning home. A budding trend is for grandchildren to move in with their grandparents. There, they jointly live off their grandparents’ pensions, and care for them all the while. Grandchildren thus have an attenuated income stream, while families are spared the expense (literally and figuratively) of sending grandparents to nursing homes.

Such domestic arrangements—perhaps more than anything else—have mitigated the pain of unemployment for Spain’s youth, maintains Joan Costa-i-Font, a Senior Lecturer in Political Economy at the London School of Economics. The trend is reinforced by Spain's traditionally high rates of homeownership. According to Eurostat figures, over 80 percent of the population were homeowners in 2010. “Property ownership [in Spain],” said Costa-i-Font, “signals social status, so second homes are even common among the middle class.” As for the lower-middle classes, “owning a house, as opposed to renting, marks ‘insider’ versus ‘outsider’ status,” Galindo told me. Foreclosure laws are draconian in Spain, but for those in their sixties and squarely in the middle-class—parents to children currently out of work—home mortgages are for the most part already paid off. Many young people regard their family’s property as the only dependable bulwark in tough times.

This fixation on home-ownership has unmistakably cultural roots; but it has had clear economic consequences as well, both during the boom years (when material yearnings fell within easy reach) and in their aftermath. Young Spaniards may be staying off the streets during this recession, but they also tend to stay in their home regions, and cluster around where they grew up, regardless of whether those areas of the country can offer them work. In recent years, some of this hunkering down has to do with the central role played by the family in Spanish culture. It may also stem from the profusion of regional universities which have sprung up over the last few decades, making it more appealing to remain close to home, says Manuel Arias-Maldonado, a political science professor at the University of Malaga.

The result is that, since the 1970s, there has been very little internal migration within Spain. As one young person told me: “I’d be more inclined to leave Spain than to move, say, from Castille-La Mancha to Catalonia or Basque country,” where unemployment rates are notably lower. With its 17 autonomous regions, Spain is one of the most decentralized countries in Europe, both institutionally and culturally. Ironically, leaving Spain altogether may feel more provisional, and therefore less jarring, than relocating within the country.

One thing is clear amidst all this: The government has been mostly reactive of late, scrambling to put out the fires of a mounting banking crisis, regional debt worries, and spiking bond prices. The ardently budget-slashing conservative Prime Minister Mariano Rajoy has tried to reform the labor market. It remains to be seen whether or not this will have positive effects down the line. But these are not the sorts of changes that can be felt in the short term, says decorated sociologist Victor Pérez-Díaz, President of Analistas Socio-Políticos, a Madrid-based research center. Meanwhile, unless the European Union consents to more stimulus spending in Spain, the ranks of the unemployed will continue to swell for the foreseeable future.

Back in the early 2000s, with the economy on the up and up, young people had already started taking to the streets to complain about their precarious lot. Businesses were capitalizing on easy credit at the time, but even then young people felt uncertain: dependent on unsteady temporary contracts, over-exposed, underpaid. They coined the phrase mileurista—someone who makes only a thousand Euros a month. Then it seemed barely enough to live on. When I ask Mario about this in Toledo, he laughs. “With a thousand Euros right now, I’d be living like a king.”